Case Name:   Linda A. Murphy v. Wells Fargo Bank, N.A., et al.

Case No.:       1-14-CV-268597

 

After full consideration of the arguments, authorities, and papers submitted by each party, the Court makes the following rulings:

 

Currently before the Court is the demurrer by defendant Wells Fargo Bank, N.A. (“Defendant”) to the complaint of plaintiff Linda Murphy (“Plaintiff”).  Defendant demurs to the first, second, third, fourth, fifth, and sixth causes of action of the complaint on the ground that they fail to allege sufficient facts to constitute a cause of action pursuant to Code of Civil Procedure section 430.10, subdivision (e).

 

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules.  ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.  We also consider matters which may be judicially noticed.’”  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  “A demurrer tests only the legal sufficiency of the pleading.  It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.”  (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

 

Defendant’s request for judicial notice is GRANTED as follows: as to the existence and the truth of the results reached in item J (see Evid. Code, § 452, subd. (d); People v. Woodell (1998) 17 Cal.4th 448, 455 [“Evidence Code sections 452 and 453 permit the trial court to ‘take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached–in the documents such as orders, statements of decision, and judgments–but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.’”]); the existence of items B, C, D, E, F, and K (see Evid. Code, §§ 452, subds. (c), (d); see also Aquila, Inc. v. Super. Ct. (2007) 148 Cal.App.4th 556, 569 [“‘[T]he taking of judicial notice of the official acts of a governmental entity does not in and of itself require acceptance of the truth of factual matters which might be deduced therefrom, since in many instances what is being noticed, and thereby established, is no more than the existence of such acts and not, without supporting evidence, what might factually be associated with or flow therefrom.’”]); and the existence, recordation, and legal effect of the language of items A, G, H, and I.  (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 [stating that courts may take judicial notice of the dates, parties, and legally operative language of a series of recorded documents, when the authenticity of the documents is not challenged, but it would have been improper to take judicial notice of the truth of various factual representations made in the documents].)

 

As a preliminary matter, while Plaintiff pleads the alleged violations of Civil Code sections 2923.55, 2923.6, and 2923.7 as three separate and distinct causes of action (i.e., the first, second, and third causes of action), the actual private right to assert a claim for a violation of any of those statutes is provided by Civil Code section 2924.12, subdivision (b).  (See Civ. Code § 2924.12, subd. (b).) Thus, the alleged violations of Civil Code sections 2923.55, 2923.6, and 2923.7 are actually components of a single cause of action.

 

The demurrer to the claim for violations of Civil Code sections 2923.55, 2923.6, 2923.7 styled as the first, second, and third causes of action for is OVERRULED. Defendant’s argument that the claim for violations of Civil Code sections 2923.55, 2923.6, 2923.7 fails because Plaintiff has not pled facts establishing a violation of the National Mortgage Settlement (the “NMS”) lack merit because Plaintiff does not have the burden of pleading Defendant’s lack of compliance with the NMS since compliance with the NMS pursuant to Civil Code section 2924.12, subdivision (g) is an affirmative defense that Defendant may raise and has the burden of proof to establish.  (See Segura v. Wells Fargo Bank, N.A. (C.D. Cal. Sept. 26, 2014) 2014 U.S. Dist. LEXIS 143038  [“[t]he statute provides a safe harbor only to the extent that the defendant is in compliance with the NMS ‘with respect to the borrower who brought an action,’ and there is no authority holding that a plaintiff needs to allege the lender’s non-compliance with the NMS to adequately plead their HBOR claims”]; see also Rijhwani v. Wells Fargo Home Mortg., Inc. (N.D. Cal. Mar. 3, 2014) 2014 U.S. Dist. LEXIS 27516  [“Wells Fargo’s argument fails at the motion to dismiss stage, however, because this safe harbor, so to speak, appears to be an affirmative defense to be raised on summary judgment and for which Wells Fargo has the burden of proof.”]; see also Stokes v. CitiMortgage, Inc. (C.D. Cal. Sept. 3, 2014) 2014 U.S. Dist. LEXIS 125655 [“It is not [the plaintiff’s] burden to plead lack of compliance with the NMS. Rather, it is an affirmative defense that Defendant may raise, but which Defendant has the burden of proof to establish.”]; see also Gilmore v. Wells Fargo Bank N.A. (N.D. Cal. July 29, 2014) 2014 U.S. Dist. LEXIS 104219 [holding that the “safe harbor under the HBOR is an affirmative defense . . . for which Wells Fargo has the burden of proof.”].)

 

Furthermore, the allegation that Defendant failed to advise Plaintiff that she had the right to request a subsequent meeting and, if requested, Defendant was required to schedule the meeting within 14 days is sufficient to constitute a violation of Civil Code Section 2923.55.  (See Complaint, ¶¶ 44, 65-66; see also Civ. Code § 2923.55, subd. (b)(2).)  Additionally, the allegation that Plaintiff submitted a complete application for loan modification to Defendant, Plaintiff complied with all of Defendant’s requests for additional documentation, Defendant recorded multiple notices of default and sale, and Defendant conducted a trustee’s sale while Plaintiff’s application was pending is sufficient to establish a violation of Civil Code section 2923.6.  (See Complaint, ¶¶ 43, 46, 48-52, 74; see also Civ. Code, § 2923.6, subd. (h).)  Defendant’s argument regarding that such allegations must be pled with particularity is not well-taken because the cases cited by Defendant involve circumstances in which the initial loan application was denied and the plaintiff was required to allege sufficient facts showing that a material change in his and/or her financial circumstances, but Plaintiff’s loan application in this case was never denied.  (See Wither v. J.P. Morgan Chase Bank, N.A. (N.D. Cal. Jul. 11, 2014) 2014 U.S. Dist. LEXIS 94795 at *11; see also Williams v. Wells Fargo Bank, N.A. (C.D. Cal. Jan. 27, 2014) 2014 U.S. Dist. LEXIS 17215 at *15-16.)

 

With respect to the alleged violation of Civil Code section 2923.7, the Court has not considered Defendant’s argument raised for the first in its reply—that the claim fails because it does not contain any allegation that Plaintiff affirmatively requested a single point of contact—because Plaintiff has not had an opportunity to address the same.  (See REO Broad. Consultants v. Martin (1999) 69 Cal. App. 4th 489, 500 [“This court will not consider points raised for the first time in a reply brief for the obvious reason that opposing counsel has not been given the opportunity to address those points”].)  Additionally, the allegations that Defendant failed to provide Plaintiff with a single point of contact because Defendant’s representative, Jessica Steffen (“Ms. Steffen”), was frequently unavailable and the other representatives with whom she spoke provided her with conflicting and confusing information about the status of her loan modification application is sufficient to state a claim for violation of Civil Code section 2923.7.  (See Civ. Code, § 2923.7, subd. (b)(3) [“The single point of contact shall be responsible for … [h]aving access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative”]; see also Diamos v. Specialized Loan Servicing LLC (N.D. Cal. July 7, 2014) 2014 U.S. Dist. LEXIS 91929 [finding that the plaintiffs’ allegation that the defendant’s personnel handling their loan application lacked the knowledge and authority required under the statute was sufficient to show that they did not constitute a single point of contact as contemplated by the statute]; see also Johnson v. SunTrust Mortg., Inc. (C.D. Cal. Aug. 4, 2014)2014 U.S. Dist. LEXIS 110257.)  Furthermore, the Court cannot say that the alleged violation was not material at the pleading stage.  (See Segura v. Wells Fargo Bank, N.A. (C.D. Cal. Sept. 26, 2014) 2014 U.S. Dist. LEXIS 143038, 16-17 [finding that it could not determine whether the alleged violation was material at the pleading stage]; see also Penermon v. Wells Fargo Bank, N.A. (N.D. Cal. June 11, 2014) 2014 U.S. Dist. LEXIS 81047, 31-32, fn. 7 [“Whether an alleged violation was ‘material’ is a question of fact and is inappropriate for disposition at [the pleading stage].”].)

 

The demurrer to the fourth cause of action for negligence is OVERRULED.  While this Court acknowledges that there remains a lack of clear direction on the issue of whether a duty is owed under the present circumstances from the California Supreme Court and the California Court of Appeal, the Court finds the decision in Alvarez v. BAC Home Loans Servicing, L.P. (“Alvarez”) (2014) 228 Cal.App.4th 941 to be well reasoned and relevant as it addresses allegations of duty that are nearly identical to those alleged in the instant case.  (See Complaint, ¶¶ 92-93.)  Moreover, given that the decision of Aspiras v. Wells Fargo Bank, N.A. (2013) 219 Cal.App.4th 948—upon which the court in Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49 relied to distinguish Jolley v. Chase Home Fin., LLC (2013) 213 Cal.App.4th 872 and find that there was no duty of care owed under the “Biakanja factors”—has been depublished and Alvarez provides a thorough and well-thought out analysis of why the Biakanja factors favor the imposition of a duty on a lender that has agreed to review a loan modification application, this Court has determined that Alvarez should be followed and finds that the facts alleged are sufficient to support a claim that Defendant owed Plaintiff a duty of care in reviewing and handling her loan modification application.  (See Alvarez, supra, 228 Cal.App.4th at pp. 944, 948-950 [holding that the defendants owed the plaintiffs a duty to exercise reasonable care in the review of their loan modification applications once the defendants had agreed to consider them]; see also Segura v. Wells Fargo Bank, N.A. (“Segura”) (C.D. Cal. Sept. 26, 2014) 2014 U.S. Dist. LEXIS 143038 * 31-32 [ finding the “decision in Alvarez to be the most relevant, recent, and well-reasoned decision on the question,”  and stating that “having offered Plaintiffs an opportunity to apply for a modification, [the defendant] owed them a duty of reasonable care in considering their application.”].)  The fourth cause of action also alleges sufficient facts to establish causation because it alleges that the improper handling of a loan modification application deprived Plaintiff of the opportunity to obtain loan modifications, and Plaintiff would have received such a modification had her application been properly reviewed.  (Complaint, ¶¶ 97-98, 100; see also Alvarez, supra, at p. 949-951.)

 

The demurrer to the fifth cause of action for violation of Business and Professions Code section 17200 is OVERRULED.  As an initial matter, the Court has not considered Defendant’s argument raised for the first in its reply—that the fifth cause of action fails to allege sufficient facts to state a claim because it does not allege that Plaintiff tendered the full amount of the outstanding indebtedness—because Plaintiff has not had an opportunity to address the same.  (See REO Broad. Consultants v. Martin, supra, 69 Cal. App. 4th at p. 500.)  Additionally, the claim for violations of Civil Code sections 2923.55, 2923.6, and 2923.7 is adequately pled and, thus, may properly form the basis of the fifth cause of action for violation of Business and Professions Code section 17200.  Furthermore, the fifth cause of action alleges facts establishing that Plaintiff has standing because it alleges an injury to Plaintiff’s interest in the Property.  (See Complaint, ¶¶ 113-114 [stating that the unfair and fraudulent conduct caused Plaintiff to lose title to and interest in the Property, be subjected to imminent eviction, lose equity in the Property due to excessive fees and charges]; see also Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310; see also Segura v. Wells Fargo Bank, N.A. (C.D. Cal. Sept. 26, 2014) 2014 U.S. Dist. LEXIS 143038 * 20-21 [holding that the plaintiffs had standing to bring their claim because they alleged injury that affected a property interest, either in their home or in lower monthly mortgage payments through a modification for which they had applied].)

 

The demurrer to the sixth cause of action for wrongful foreclosure is OVERRULED.  The claim for violations of Civil Code sections 2923.55, 2923.6, and 2923.7 is adequately pled and, thus, may properly form the basis of the sixth cause of action for wrongful foreclosure.  Additionally, the sixth cause of action alleges procedural irregularities that are sufficient to rebut the presumption that the trustee’s sale of the Property was conducted regularly and properly. (Complaint, ¶¶ 119-121; see also Moeller v. Lien (“Moeller”) (1994) 25 Cal.App.4th 822, 831 [“A nonjudicial foreclosure sale is accompanied by a common law presumption that it ‘was conducted regularly and fairly.’”]; see also Melendrez v. D & I Investment, Inc. (“Melendrez”) (2005) 127 Cal.App.4th 1238, 1258 [“This presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity.”].)  Furthermore, the Court cannot determine on demurrer that the presumption is conclusive as it is a question of fact whether MSB Homes, LLC—the entity that purchased the Property at the sale—was a bona fide purchaser.  (See Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1254 [“We note preliminarily that the issue of whether a buyer is a BFP is a question of fact.”].)

 

The Court notes that in Plaintiff’s opposition she requests leave to amend her complaint to add a new cause of action for negligent misrepresentation.  The Court declines to rule on the request.  Plaintiff may file an application to amend her complaint if she desires to add an additional cause of action or seek a stipulation for leave to amend.

 

The Court will prepare the order.